Which Statement Regarding Inherent Risk Is Correct

question 3

Multiple Choice

Which statement regarding inherent risk is correct?

• A) Most auditors set a high inherent risk in the first year of an audit and reduce it in subsequent years as they gain experience, even when there is inherent risk.
• B) The inherent risk assigned in the audit risk model is unaffected by the auditor's experience with client's organisation.
• C) The inherent risk assigned in the audit risk model is dependent upon the strengths in client's internal control system.
• D) Most auditors set a low inherent risk in the first year of an audit and increase it if experience shows that it was incorrect.

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Definitions:

Fovea

A small depression in the retina where visual acuity is highest due to the dense concentration of cones, responsible for sharp central vision.

Rods

Photoreceptor cells in the retina of the eye that function well in low light and are primarily responsible for black-and-white vision.

Cones

Cells in the eye's retina known as photoreceptors work optimally in well-lit conditions and allow for the recognition of different colors.

Color Receptors

Specialized cells in the retina of the eye responsible for detecting color through the absorption of light at varying wavelengths.